SuSE Linux has released an update to its Openexchange Server software, with features intended to make it a more effective alternative to Microsoft's Exchange Server for e-mail and calendar functions.

For SuSE--the No. 2 seller of Linux after Red Hat, according to researcher IDC--the Openexchange Server product is an important competitive tool against Microsoft.

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The software can slip in instead of Exchange on servers, though people's desktop PCs running Microsoft Outlook need a special plug-in to work with Openexchange.

The new version of Openexchange, 4.1, has been modified to address a common complaint from customers. Newly arrived e-mail is now automatically sent to desktop PCs, said Holger Dyroff, general manager of SuSE's Americas business unit. In the past, people had to manually check with the server for new messages.

The change is made possible by the use of a new interconnect technology, Dyroff said, which also means other software, such as that for managing projects or customer relationships, can dovetail with Openexchange Server.

About 70 percent of Openexchange customers are using the software to replace Microsoft Exchange, Dyroff said. Among them is heavy-equipment maker Caterpillar, which is using the software for about 800 Outlook clients. Caterpillar moved its server software from Exchange 5.5 to Openexchange Server midway through 2003, Dyroff said.

Customers often switch software in phases, Dyroff said. "Many customers migrating from Exchange 5.5 or other e-mail servers don't want to migrate both sides at once," he said. Instead, they change the server first and then the desktop software later.

Microsoft still believes it has advantages worth paying for. Its newest Exchange 2003 product "offers superior features, functionality, ease of use and overall business value" compared with SuSE's product, Microsoft said in a statement.

Although much of SuSE's software is open source, including its Linux operating system, the company isn't afraid to adopt the methods of the same proprietary software world it's trying to compete against. Most of Openexchange is open source, but there is a proprietary part that governs how many PCs may use the server at the same time, Dyroff said.

The software costs $1,240 for a version that permits 10 simultaneous users to connect to the software. Additional client access licenses cost $30 to $50 per user, Dyroff said, with discounts for nonprofit or educational organizations. For average use, one four-processor server can handle about 2,500 to 3,000 users, Dyroff said.

Client access licenses are not popular with customers, though, said C.E. Unterberg Towbin analyst Katherine Egbert. "People hate client access licenses," and even Microsoft has been moving away from the approach to an extent, she said. Red Hat has said one reason it believes it's made some inroads against Microsoft is because it doesn't use them, she added.

Dyroff defended the client access license approach: If the company sold the software for any number of clients, it would have to charge more to make it pay off, and the higher price tag would preclude many smaller customers. In addition, he said, many functions of Openexchange Server, such as file storage and print job management, don't require the client licenses.